The revised country export quotas for the first quarter (January 1 to March 31, 1948) and the types of petroleum with their census schedule B numbers follow:

Exports of petroleum products to Canada are not included in these figures. Export licenses are not required for shipments to Canada.

Separate quotas of petroleum products for Greece and for Japan and the Ryukyu Islands, as announced on February 10, have not been changed.

The amounts unallocated and listed as reserves have not been reduced below the totals announced on February 10. OIT officials explained that the unallocated amounts had already been reduced to the minimum necessary to take care of emergency needs and for exports to certain small countries not included in the allocations by country. It is hoped that it will not be necessary to use all the unallocated amounts. The amounts not used will represent a further saving, it was explained.

The net result was the imposition of 100-percent reduction on the embargo of the shipment of kerosene to Australia and Honduras and of residual fuel oil to Australia, and further reductions in various percentages of exports of gas oil and distillate fuel oil to two countries. and of kerosene to three countries. But, as indicated, the Department refused to accept the offer of these countries to further reduce their imports to the extent of 599,000 barrels. In the meantime, tentative arrangements have been made to secure the assignment of an adequate supply of tankers to transport these heating oils to the east and northeast coast ports, if releases can be obtained from the reserve items, which have in excess of these needs 776,422 barrels.

A survey has been made of terminal storage facilities, and they have been found to be completely adequate in all of these coast ports. If these heating oils could be released, they could be promptly placed under the control of the State officials in existing pool arrangements and would constitute a most effective influence against any other shortages in the absence of a major catastrophe.

This joint resolution will implement the proposal of insuring, through the cooperation of the oil industry, tanker system, and railroads, the supplies of heating oils which are indisputably needed at this time. Should there be any surplus after the heating season ends, it would obviously be possible to transfer that surplus to any countries requiring portions of it. It should be noted that the joint resolution also exempts exports of aviation and motor gasoline and lubricants and confines itself solely to this method of diverting existing heating oils to domestic uses.

A brief reference might be made to an argument advanced frequently by those opposing an embargo. They urge there are no physical pools of oils in reserve and that no power exists in any department to direct distribution to any place. The short answers are that the oil is in existence, above ground, ready to be shipped and that if existing licenses are used those stores will be shipped overseas. Further, that competent leaders of the oil industry have stated that if the oils cannot be shipped overseas, they will be shipped to domestic ports. When this has been done, to the extent of 599,000 barrels, the objective of this resolution will have been accomplished.

The committee is of the opinion that the embargo proposed will effectively, feasibly, and reasonably meet the situation.

THE MINORITY VIEWS

In 1947 the petroleum industry faced the greatest consumptive demand and produced the greatest supply of petroleum products of any year in our history. The production of over 5,000,000 barrels a day was not equal to the consumptive demand. This greatest demand of all time, with a long cold winter, brought the Government agencies into the situation to exercise powers within the scope of their administrative authority in an endeavor to restrict the exportation of petroleum products through the control of export licenses to our foreign markets.

The general policy pursued by the Government was to exercise a flexible control, having in mind our domestic needs and the essential needs of our foreign customers.

House Joint Resolution 323 proposes a 30-day embargo on exports of kerosene, gas oil, and distillate fuel oil or residual fuel oil to part of the foreign areas to which the United States industry has long been supplying such fuels. The effect of the embargo would be to preclude the present discretionary control of exports to the affected countries, regardless of how essential their needs may be. It would substitute a legislative prohibition for 30 days for the present discretionary control of licenses based upon the established needs of the importing countries.

We believe that such an embargo is ill-advised and not warranted by present conditions. The possible harm it may do to our domestic economy and to our present international relations far outweigh any probable benefits that can result from this embargo.

The particular problem forced upon the country as to these fuel petroleum products was primarily due to the demand created on account of the long, cold winter. A partial legislative embargo might have been warranted in the early part of the winter, but it is no longer appropriate, in view of the near approach of spring with lessening demands for heating fuels. A legislative embargo, if it has been warranted at any time this winter, is now too late, inappropriate, and

unnecessary.

We are not now supplying these fuel products to unfriendly nations. The embargo proposes a discrimination as between the friendly nations who are receiving these products from our country. Unfortunately, the embargo proposed is directed against our friendly nations who are in a most critical need of the supply, in western Europe. The embargo proposes a treatment of those nations that could easily be used against us by charges of discrimination and as indicating an indifferent concern as to the effect upon them where only a small fuel supply is concerned. An embargo on exports for any period of time is a most drastic measure for any nation to take under any circumstances. It is justifiable only on a clear showing that the needs of the domestic economy require it and would actually be satisfied by it, or as an economic sanction-a means of economic warfare-applied to unfriendly foreign

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countries. Neither of these two situations is involved here. same time, it is quite clear that such action would result in a serious injury to a number of friendly foreign countries, particularly in western Europe. And, it would seem unnecessary to emphasize the importance at this particular time of considering most carefully any such action which would imperil the economic position or political status of those countries.

FUEL OIL EMERGENCY OVERCOME

We concur entirely with the view that the needs of our own people should come first in any such fuel situation as we have faced this winter. Fortunately, we are approaching the end of the seasonal weather that primarily created this hardship.

We must also recognize that the industries and the Government agencies have within their authority, authorized by Congress, materially contributed to the amelioration of this distressing situation.

Through voluntary arrangements entered into between industry and State and Federal officials, as authorized and directed by the Congress in Public Law 395, Eightieth Congress, approved December 30, 1947, the shortage situations in specific localities are being met by increasing the production of fuel oil and by more efficiently distributing it.

The tenor of the information presented to the committee is to the effect that the crisis is now overcome.

ACTIONS TAKEN BY COMMERCE, INTERIOR, AND STATE DEPARTMENTS RELATING TO PETROLEUM SITUATION

1. June 30, 1947, export controls which had been lifted since the end of the war, were reimposed on the six major petroleum products. 2. An export quota was established for the fourth quarter, 1947, at the same level as in 1946, but substantially below the then current rate of exports and less than half of the stated requirements of the foreign countries dependent on our supplies.

3. Commerce Department officials held discussions, late in November and early December, with the Canadian Government, resulting in an agreement by that Government to restrict its imports of heating fuels during the winter months to 50 percent of the average shipments during 1947. This agreement became effective January 1, and while originally made on a month-to-month basis, has now been extended through April 1.

4. On January 2, the export quota for the first quarter, 1948, to all other areas was established at approximately 60 percent of the quantity exported in the same period in 1947, and at approximately half the stated foreign requirements.

5. On January 30, the first-quarter quota was reduced by 18%2 percent and at the same time an administrative embargo was placed on the licensing of exports for any products originating on the east

coast.

6. After further consultation with the American Embassies in the countries concerned and the governments of such countries, a further cut in the quota of about 6 percent was announced on February 19, 1947.

7. It should be understood that the export quotas originally set by the Department of Commerce, and which were subsequently reduced,

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do not necessarily mean that the original request was not justified. The reduced amount was justified by the increased urgency for the domestic supply. A number of foreign countries indicated their willingness to cooperate in such reductions even though their needs were greater than could be supplied.

WHAT IS INVOLVED

House Joint Resolution 323, as amended and reported, applies only to exports of such products originating from the east and Gulf coasts. About 70 percent of our exports of the products covered by the resolution ordinarily originate from the Gulf coast, about 25 percent from the west coast, and the balance from other areas. On January 30, 1948, the Department of Commerce established a policy effective for an emergency period until March 31, 1948. It limited licenses for the export of petroleum products from those areas from which fuel oil can best be spared. Accordingly, it has not since issued any licenses for shipments originating on the east coast of the United States. This tended to ease the situation in that area and such limitation has not seriously affected essential exports. If we extend the embargo to the Gulf coast, we will halt a substantial portion of our exports intended primarily for western Europe.

The embargo would not affect exports to Canada. Through an agreement negotiated by the Department of Commerce with the Canadian Government in December 1947 exports to Canada are already limited to not more than 50 percent of such exports in the comparable period of 1947. The resolution would specifically continue this policy.

HOW PETROLEUM EXPORT QUOTAS ARE FIXED

Export control is exercised under section 6 of the act of July 2, 1940, as amended (50 U. S. C. A. 701). The most recent extension of this act was by Public Law 188 and Public Law 395, of the Eightieth Congress. The determination of the materials or products to be controlled is made by the Department of Commerce upon the advice and recommendation of two interdepartmental committees known as the Advisory and Review Committees under the Second Decontrol Act, Public Law 188. These committees also have the responsibility for recommending the quantitative limits to be placed on the export of the controlled commodities.

With respect to petroleum, before establishing quotas by country, the possibility of supply from other sources is taken into account, and countries relying almost entirely on the United States are granted relatively larger allocations. This information is obtained from American diplomatic missions abroad and is correlated with all other sources of data. Information is also obtained concerning indigenous production, the industries dependent on United States supplies, and prevailing restrictions on consumption. The United States is considered to be the last or residual source, our supplies to be made available to each country only after its production and imports from other sources have been maximized, and then only to the extent necessary to supplement such supplies to meet minimum essential needs. Practically every country to which we export petroleum